If you are a long term investor, you tend to always make returns in equities. In fact, equity shares have known to outperform other asset classes in the long term. We have selected a few stocks that offer great opportunities for long term investors. These include stocks that have a very low debt to equity ratio and which have shown good growth over the years. These stocks have the tremendous potential to generate money in the long term.
Here are a few stocks that are from sectors such as consumer, media and banking.
MOIL is a government owned company that is engaged in the mining of manganese ore. The prices of Manganese have been on a rise in the last few months. In fact, in FY 2018, the company recorded the highest ever turnover as volumes increased and also realizations.
There are a number of reasons to be buying the MOIL stock. The company is a solid cash generating business that is also debt free. It is also looking at gradually expanding its mining capacity.
In FY 2018, MOIL recorded a production of 1.2 MT and by 2021, it plans to almost double the mining capacity to 2.5 MT. MOIL is a leader in manganese ore has solid cash reserves and a dominant position in the market.
MOIL is also looking at a ferro alloys plant that will be internally funded.
Good financials from MOIL
The company's business is almost risk free, as is the case with all mining companies. Demand for manganese also is robust, as steel continues to record good growth.
For the quarter ending June 30, 2018, MOIL reported a net profit of Rs 113 crores on a revenue of Rs 313 crores. The EPS reported was Rs 4.40 for the said quarter. We believe the company can do an EPS of Rs 18 for FY 2018-19.
By 2020-21, the company may report an EPS of Rs 27 at least, riding on its expansion plans. This makes the stock attractive at the current market price of Rs 186.
In fact, if one is ready to hold the stock for a couple of years, we believe that it is possible to get solid returns.
Jammu and Kashmir Bank
Jammu and Kashmir Bank is probably one of the cheapest banking stocks to own from the private sector space. The stock has fallen from levels of Rs 95 to the current levels of Rs 58. At the current price the stock is an excellent buy.
The bank has a very dominant share in its home state of Jammu and Kashmir, with 85 per cent of its deposit from the home state. This protects the bank from interest rate competition with other banks to a certain extent.
Over the last few years, Jammu and Kashmir Bank has managed to improve its net interest margins to 4 per cent, from the earlier three per cent.
Jammu and Kashmir Bank: Non performing assets to moderate
The gross non performing assets at the bank was placed at 9.83 for the quarter ending June 30, 2018, as compared to10.79 per cent in the corresponding period of last year.
We believe that there is a full possibility that non performing assets would moderate in the coming quarters as revival in the J&K economy takes place.
If you see the stock is currently trading below book value and the bank has a very small equity capital of around Rs 55.70 crores. This means a slight revival in the fortunes of the bank could send the stock soaring. The price to book value of the bank is also at a very decent 0.55 times. The bank's shares have also halved in value over the last few months, which makes it an interesting pick at the current levels.
The bank can deliver an EPS of Rs 11 by 2018-19, which translates into a p/e of just over 6 times. A very cheap stock to buy.
Jagran Prakashan publishes the "Dainik Jagran", which is the country's No 1 newspaper in terms of readership and circulation. It also owns the radiocity, radio network, which is ranked as the leading radio station in Bengaluru, Mumbai and Delhi.
Jagran also owns the popular "Mid-Day" eveninger in Mumbai, again a leader in its segment. It's digital business, which largely involves most of the publications online, has also been growing rapidly. The unique users on its various platforms crossed 40.6 million. It remains the top Indian website in the healthcare and education categories.
The company has performed reasonably well for the quarter ending June 30, 2018, which is one reason to be recommending this stock. With elections in key states, where the company has a presence in the next few months, revenues and profitability are likely to soar.
JPL remains a leader in the Hindi newspaper business, radio stations (select cities) and digital business (certain categories).
Jagran: Good quarterly performance for June 30, 2018
Jagran Prakashan has reported a good set of quarterly numbers for the quarter ending June 30, 2018. The digital print business saw a 16 per cent jump in revenues for the first quarter of 2018-19, as compared to the previous quarter of last year.
The radio business also saw a superb performance, with the margins expanding by 300 points and the company believes these are sustainable. After two quarter of de-growth, the print business of the company, saw a jump in revenues to Rs 361 crores for the quarter ending June 30, 2018, from Rs 314 crores in the previous quarter ending Dec 31, 2018.
Jagran Prakashan shares currently offer you a dividend yield of as much as 2.5 per cent. The company regularly distributes good dividends and has engaged in buybacks to enhance shareholder value. With elections round the corner, we believe that the company can report good numbers in 2018-19. The shares are available at a p/e of just 11 times one year forward earnings.
A good stock to buy at the current levels.
South Indian Bank
South Indian Bank has crashed to a new 52-week low and offers investors ample opportunity for long-term growth.
The bank reported a mediocre set of numbers for the year ending March 31, 2018. Advances at the bank saw a superb growth of 17 per cent, while retail, SME and gold loans saw a sharp jump of 20 per cent in growth.
What's most interesting is the fact that the bank has zero corporates, under its watch list on corporate loans. During FY 2018, the Current and Savings Account grew by 9 per cent, while net profits jumped 51 per cent to Rs 114 crores, from just Rs 76 crores.
South Indian Bank: Bright prospects for the longer term
The bank has laid out a strategy for long term growth. Accordingly, the bank will ensure more efficient branches for faster processing of loans, with a clear road map for mobilizing funds through CASA.
It will also increase its POS and ATM network. The bank will also lay an emphasis on housing finance, with a retail hub in Kochi. The SME loan book, which has grown rapidly, will see the appointment of a JGM for better coordination between the regions.
The bank reported an EPS of Rs 1.85 for FY 2017-18. Going ahead, it is possible that South Indian bank ends the year 2018-19, with an EPS of Rs 2.2 at the very least. This means the stock is currently valued at just 10 times one year forward earnings.
If you value the stock at even 15 times p/e, the stock should yield a decent return in the short to medium term. South Indian Bank is a good stock to own for the long term.
Best small cap stocks to buy
In the past some small cap and mid cap stocks have given excellent returns. In fact, small cap stocks have beaten returns from large cap stocks, which have made them excellent bets for the long and short term. Please click on the link to see some excellent small cap stocks ideas.
The article is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author owns shares in Jammu and Kashmir Bank.